Social Development Minister Lindiwe Zulu has published the Green Paper on Social Security and Retirement Reforms for public comment.

The paper addresses several key social security issues, including the Basic Income Grant, the mandatory retirement, death and disability insurance fund for all workers, and the expansion of social security grants.

According to the paper, high unemployment levels have left those between the ages of 18 and 59 who do not qualify for grants, with no means to an income.

“There are no provisions to address the plight of individuals who have no income but do not meet the means test criteria to receive social grants (the 18 – 59 age group challenge). The expectation that this group would derive their income primarily from selling their labour has proven to be ineffective in the context of persistent, long-term and structural unemployment.

“This gap also falls short of the constitutional mandate and the social protection floor envisaged in the National Development Plan, and this led to the proposal to investigate the feasibility of a basic income grant,” the paper says.

The paper also raises concern that millions of workers are currently not adequately covered for retirement, disability and survivor benefits, and suggests that a National Social Security Fund (NSSF) could fill this gap.

“Although private occupational and voluntary schemes partially fill this gap, some 6.2 million formal sector workers – primarily low-income earners, informal workers and informal sector workers – are excluded from such arrangements.

“Therefore, the key reform proposal is the introduction of a National Social Security Fund (NSSF), a centrally managed public fund to provide retirement, survivor, disability benefits and unemployment benefits. All employers and employees will be obliged to initially contribute between eight and 12 per cent of qualifying earnings up to a ceiling, based on the Unemployment Insurance fund (UIF) ceiling, which is currently at R276 0004 per annum,” the paper said.

According to the paper, those earning less than R22 320 per year will not be obliged to contribute to the fund.

In terms of the expansion of social security grants, the paper proposes that all dependent children, the disabled and the elderly and those of working age, be eligible for income support, regardless of their income or assets.

“This basic income will form part of a comprehensive social protection floor and is the basis of the Pillar 1 reforms. The additional expense to the fiscus could be phased in over time through changes to the structure and value of tax rebates, subsidies and the possible introduction of additional tax. The proposal for the universalisation of the existing grants is premised on the fact that State benefits are mostly universal already, but fragmented, with different systems,” the paper said.

Source: South African Government News Agency